Ministers and Vice Ministers from seven South American countries on Oct. 8 reached political agreement on the ?founding document? to set up the Bank of the South, a new institution designed to push regional integration. The technical discussions, the ninth round of which will begin on Tuesday in Rio de Janeiro, will proceed until agreement is reached on aspects of the Banco including the amount of capital to be contributed by each member, the bank’s Board of Directors, the terms and time periods of capitalization, and the bank’s administrative council, Brazil’s Finance Minister, Guido Mantega said.
Asia is on track to halve extreme poverty by 2015, reflecting the impact of the region’s dynamic economy on the lives of its nearly four billion people, according to a joint report released Oct. 8. The report by the Asian Development Bank and the UNDP said Asia was also set to achieve goals in primary education coverage, gender parity and fighting the deadly AIDS virus. The findings were set out in an update on the region’s progress towards achieving the Millennium Development Goals. Uneven progress within countries and many of the less developed economies need global support to plug some of their key development gaps, it said. If the countries in the region that are either slow or regressing, were able to speed up and meet the MDG targets by 2015 then some 196 million people would be lifted out of grinding poverty.
The credit squeeze will force governments worldwide to make substantial changes to their budget plans, Rodrigo Rato, outgoing Managing Director of the IMF, has warned. Rato said the credit squeeze was a ?serious crisis? that was not over yet and would curtail growth worldwide.His comments came during an interview with the Financial Times in which he appeared to endorse European concerns about the decline in the dollar; Rato said the dollar is now “undervalued” on many measures. Rato said the market crisis “is going to have an impact on growth” and that this will force finance ministers to revise their budget assumptions.
Agricultural Bank of China, saddled with USD 100 billion of bad loans, may move some of its 14,500 rural branches to independent companies to speed up a government bailout and sell shares for the first time. The nation’s fourth-largest bank, established in 1979 to serve China’s 800 million farmers, plans to reduce its ownership in unprofitable offices to trim delinquent debt, according to a draft of a government proposal obtained by Bloomberg News. China has spent about USD 500 billion bailing out its biggest lenders over the past decade.
Joseph Stiglitz, a Nobel economics laureate visiting Venezuela this week, said developing nations must strike a balance between public and private control of the economy. After meeting in the presidential palace with Venezuelan leader Hugo Chavez, Stiglitz praised the South American country’s success at distributing its oil income among citizens. He urged the government to ensure its economic policies are leading to sustainable growth. “What’s fundamental is to have a balance in the role of the market and the government in the economy,” Stiglitz said at a forum on emerging markets sponsored by a local bank. “We have to realize it’s not just about setting interest rates, but also about supporting growth.”
In an interview with Spanish business daily Cinco Dias, World Bank Vice President Ana Palacio stressed the strength of the Bank’s financial situation since the IBRD transferred USD 1,500 million to International Development Association (IDA), which she expects will ?set the tone for other donors, most notably European governments? during the next IDA replenishment.